SM Energy Company (SM) swung to a net loss for the quarter ended Sep. 30, 2016. The company has made a net loss of $40.91 million, or $ 0.52 a share in the quarter, against a net profit of $3.11 million, or $0.05 a share in the last year period. On the other hand, adjusted net loss for the quarter widened to $29.04 million, or $0.37 a share from a loss of $23.28 million or $0.34 a share, a year ago.
Revenue during the quarter dropped 4.98 percent to $352.66 million from $371.15 million in the previous year period. Gross margin for the quarter expanded 648 basis points over the previous year period to 56.75 percent. Operating margin for the quarter stood at negative 5.01 percent as compared to a positive 8.65 percent for the previous year period.
Operating loss for the quarter was $17.65 million, compared with an operating income of $32.10 million in the previous year period.
However, the adjusted EBITDA for the quarter stood at $205.15 million compared with $259.36 million in the prior year period. At the same time, adjusted EBITDA margin contracted 1171 basis points in the quarter to 58.17 percent from 69.88 percent in the last year period.
President and chief executive officer Jay Ottoson comments: "SM Energy has a straightforward strategy to generate differential shareholder returns by becoming a premier operator of top tier assets. Over the last few months, we have executed a series of transactions that will transform our portfolio and position our Company to operate an expansive inventory of highly economic, high margin drilling projects. Following completion of both our Rock Oil and Qstar acquisitions in the Midland Basin, totaling $2.6 billion, and several non-core property divestitures totaling $980 million in gross proceeds, we will be focused on oil production from our pro forma 83,750 net acre position in the Midland Basin and natural gas/NGL production from our operated 161,475 net acre position in the Eagle Ford."
Operating cash flow drops significantly
SM Energy Company has generated cash of $415.01 million from operating activities during the nine month period, down 47.12 percent or $369.84 million, when compared with the last year period. The company has spent $361.82 million cash to meet investing activities during the nine month period as against cash outgo of $934.85 million in the last year period. It has incurred net capital expenditure of $312.82 million on net basis during the nine month period, down 66.50 percent or $621.04 million from year ago period.
Cash flow from financing activities was $927.45 million for the nine month period, up 518 percent or $777.38 million, when compared with the last year period.
Cash and cash equivalents stood at $980.67 million as on Sep. 30, 2016, up 497,700 percent or $980.47 million from $0.20 million on Sep. 30, 2015.
Working capital increases sharply
SM Energy Company has recorded an increase in the working capital over the last year. It stood at $917.98 million as at Sep. 30, 2016, up 1,649.20 percent or $865.50 million from $52.48 million on Sep. 30, 2015. Current ratio was at 3.79 as on Sep. 30, 2016, up from 1.11 on Sep. 30, 2015.
Days sales outstanding went down to 50 days for the quarter compared with 51 days for the same period last year.
Debt moves up
SM Energy Company has witnessed an increase in total debt over the last one year. It stood at $2,894.32 million as on Sep. 30, 2016, up 14.22 percent or $360.32 million from $2,534 million on Sep. 30, 2015. Short-term debt stood at $128.92 million as on Sep. 30, 2016. Total debt was 50.03 percent of total assets as on Sep. 30, 2016, compared with 40.78 percent on Sep. 30, 2015. Debt to equity ratio was at 1.57 as on Sep. 30, 2016, up from 1.16 as on Sep. 30, 2015.
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